If you are a Google Trends fan, you will notice that the search for the phrase “do not pay credit card” increases during this time.
10 min read
The opinions expressed by employees are personal.
By: Edgardo Rivera
If you are a Google Trends fan, you will notice that the search for the phrase “do not pay credit card” increases during December. This means two things: first, that people do not get up one day and decide “I will not pay my card”, but first evaluate the consequences. And, second, that in December there are many expenses and that more than one goes hand in hand with the gifts they will put under the tree.
But, what is relevant here is that reaching this situation is the result of a chain of unfortunate events (or unfortunate expenses) that people get out of hand when they have no control over their finances: that is, when they buy things that they don't need money they don't have or when they live up to date and unexpected events happen that end up squeezing their accounts … or a mixture of both.
I want to think that we have all been there at some point in our lives, so I seek to help explain what happens exactly when one decides (or is forced) not to pay his credit card.
What can you do if you realized that you have no money to pay?
Before deciding that you will not pay a peso, use up your alternatives.
Stop using the card: concentrate all your available resources on paying the debt as soon as possible. If you have several cards, I advise you to pay the card with the highest interest rate first.
Approach the bank and negotiate: tell the executive about your situation and ask about different solutions they can offer you. The bank will not want to lose your money at all, so they can offer you options that range from freezing your debt to charging less, or completely canceling interest. But, warning: do not accept deals that you know you will not be able to comply with: if you cannot pay up to a certain amount per month, be honest. Let the executive help you find a solution.
Show goodwill by paying at least the minimum: This is the most logical solution. Pay the minimum required on the statement. Your interests will continue to rise, but at least you will not have a negative mark on your history.
Consolidate your debts with a personal credit: if the bank does not offer you alternatives, approach other financial institutions that offer preferential rates for migrating your balance with them or review the conditions offered by personal loans, since they are often better than those Offers you your card.
Borrow a relative: As a last resort, consider approaching a relative who can pay off your debt. This option is the best if what you want is to have a payment scheme that fits your possibilities and avoid at all costs staining your history, for example, if you plan to ask for a larger credit soon.
Now, let's talk about the consequences. What can you expect?
- The bank is going to look for you insistently …
From the first days they will start calling you and asking you when they can wait for your payment. I recommend that you answer and tell the truth, because they will keep calling you and even call your endorsements or references. After 120 days of waiting for your payment, the bank is entitled to sell your debt to a collection office … And here the nightmare will begin.
- The collection office will harass you …
Collection offices are characterized by using unorthodox methods to recover money. Some will even threaten you with consequences that are not possible or, at least, that will not happen easily and without lawyers involved.
The collection offices will call you and all your acquaintances; Wait until they call your boss.
They may send you documents and tell you that they are court orders; or that they appear as entities of some authority to ask you to pay off the debt partially and to give them money: at this point, do not do it !, it is very possible that these extraordinary payments are not reflected in the payment of your debt. In other words, you would be paying them just to be left alone for a while. If you decide to negotiate your debt with the collection office, be sure to sign an agreement that records the payments.
Something you should know is that collection offices cannot appear in your home to take you to jail or to seize your assets. To do so, they must first pass through a judge who decides.
Not paying is a reason for jail?
The bank can sue you after the third month that you stop paying your debt, but carrying this demand would probably cost you more than recovering the money.
Therefore, banks prefer to sell the delinquent portfolio to a collection office. But let's assume that the bank demands you: The Political Constitution of the United Mexican States says in the last paragraph of article 17 that civil debts, such as those incurred with credit cards, personal loans, mortgages, among others, do not They may be punished with imprisonment.
So, no: they can't take you to jail because you can't pay your credit card, because money debts are no case for criminal lawsuits. Remember this if a collection office is threatening you.
Other rules apply if it is found that the customer intended not to pay, if he falsified documents or if he is a serial delinquent debtor, but that is another matter.
On the other hand, banks and offices must adhere to one that prohibits them from doing certain practices.
Can you get me?
Collection offices can tell you that they are going to seize you, but this is almost never true, because to do so they should have written in your initial contract that you would leave a good as collateral. I don't remember the last time I signed a credit card acquisition contract in which I said that I left my home or my car as collateral … it must be because it has never happened. It could happen, yes, but it's not common.
Let's talk about the first consequence: A stain on your credit history
To talk about being “put in the credit bureau” is the coconut of the financial world. But, as I have explained to many, the problem is not that they “get you” or “don't get you”, but what qualification you have. In fact, if you have a credit card or a bank credit product, they already “got you”. But if you pay your debts late, be sure that your rating will go down and you can say goodbye to all your future plans that required a loan: studies, travel, home repairs, mortgages, car loans, etc., bye!
Then, when you stop paying your debt, the first thing the bank will tell you is that they are going to “put” you into the bureau. You already know that this is false, because you are already there, only now you will have a bad score.
Second, if they tell you that they will erase your brand in the history if you pay, find out that this is also a lie, as there is a set period of time for the brands to be removed from the credit history. No one can manipulate the information of the Credit Bureau.
As for the immediate consequences of stopping paying your credit card, you will have a drop in your rating and that:
A. They will give you credits with higher interest rates or,
B. They will deny you the credits you ask for.
Keep these times in mind to control the damage you will do to your history
After the first 30 days of non-payment: the bank will inform the Credit Information Companies about your delay.
90 days later: Your account will be reported as a possible cause of bankruptcy.
The point of no return is given after 120 days: Your credit history will already be broken.
Then what do you do?
The situation is complicated, I know. But the worst thing you can do is as if nothing had happened and forget about the debt. Gather your bravery and go talk to the bank, or at least call. It is better that you are always aware of the amount of debt and the interest you owe. Maybe they will propose solutions that were previously out of your reach.
There are also companies that promise to repair your debt. But you should be aware that, when negotiating your debt through this method, your credit history will appear as a “take off,” and this will negatively affect your score. That is to say that they will negotiate your debt, you will have to continue paying it and still your history will be affected.
To owe money when you are young seems very simple; until you decide to have a family and you need financing. It is not recommended that you play the fool, because you can miss opportunities that at this time do not even occur to you.
Being well standing in the credit world is important and if you don't believe it, how much do you use Uber- type services without a card? How much do you use recurring charges such as your cell phone or Netflix ? How much do you buy online?
Be good with your credit card and she will be good to you.